London offices at mainline stations in demand as occupiers seek to commutes
Offices near mainline stations in London have lower vacancy rates and higher rents than elsewhere in the capital as occupiers look to cut down commutes of their workforce to entice them back to the office.
Data, by CoStar shared exclusively with Morning Wire, comes amid a challenging period for London’s commercial property market.
The impact of work from home practices introduced amid the Covid-19 pandemic four years ago have damaged the value of lower grade spaces and also left occupiers seeking less space.
Figures now show vacancy rates within a 0.2 mile radius of the key mainline stations of Cannon Street, Charing Cross, Euston, King’s Cross, Liverpool Street, London Bridge, Paddington, Victoria and Waterloo have fallen steadily over the past 18 months.
Space close to mainline stations now has a vacancy rate nearly 200 basis points lower than the central London average, the widest such spread in 15 years.
Rising demand has also allowed landlords of buildings close to mainline stations to push rents higher.
Space-weighted average asking rents have risen by 17 per cent over the past two years in buildings within 0.2 miles of London’s major transport hubs, compared to flat growth across central London as a whole.
Mark Stansfield, senior director of UK market analytics at CoStar Group, said this trend is a “complete reversal” of the state of play nine years ago, when “vacancy close to mainline stations was substantially higher than the average”.
He explained: “Many of London’s largest office deals over the past couple of years have taken place close to key transport hubs, as company executives seek to reduce commuting times for their staff and, in some cases, lure them back into offices.”
“Walk times of five to 10 minutes and avoiding a tube journey are increasingly important factors when choosing an office.”
He added: “Paddington, which has also benefited from the arrival of Crossrail, has been a key target for occupiers. Paddington Square was nearly fully leased upon its delivery just over a year ago following a string of pre-lets.”
“201 Bishopsgate has been a similar success story beside Liverpool Street Station, while major pre-lets are on the cusp of being signed at nearby 2 Finsbury Avenue and at the redevelopment of the former House of Fraser building close to Victoria Station.”